Presumably in response to Republican scare stories about Medicare cuts to Medicare Advantage plans and insurance company lobbying, CMS has announced an increase in payments of 0.4% in 2015, in place of the expected 1.9% rate cut as of February. This negates a distorted Republican attack that Obama is cutting payments to Medicare.

The proposed cuts were to what is essentially corporate welfare for insurance companies running Medicare Advantage plans. The plans increased payment compared to what it costs to care for similar patients in the government Medicare plan. Republicans have included the same cuts which were previously proposed by the Obama administration in their proposed budgets despite faux attacks against Democrats for cutting Medicare.

Rate Announcement Details Plan Payments and Other Program Updates for 2015

Today, the Centers for Medicare & Medicaid Services (CMS) issued the 2015 rate announcement and final call letter for Medicare Advantage and prescription drug benefit (Part D) programs. The announcement sets a stable path for Medicare Advantage and implements a number of policies that ensure beneficiaries will continue to have access to a wide array of high quality, high value, and low cost options while making certain that plans are providing value to Medicare and taxpayers.

Since the Affordable Care Act was passed in 2010, Medicare Advantage premiums have fallen by 10 percent and enrollment has increased by 38 percent to an all-time high of more than 15 million beneficiaries. Today, nearly 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan. Furthermore, enrollees are benefiting from greater quality as over half of enrollees are now in plans with 4 or more stars, a significant increase from 37 percent of enrollees in such plans in 2013.

“The policies announced today will provide improved benefits in Medicare Advantage and the Prescription Drug Plans while keeping costs low for Medicare beneficiaries,” said Jonathan Blum, CMS principal deputy administrator. “We believe that plans will continue their strong participation in the Medicare Advantage program in 2015 and beneficiaries will continue to have access to a wide array of high quality and affordable Medicare health and drug plans.”

After careful consideration of public comments, key changes and updates finalized in the Rate Announcement and final Call Letter include:

Lower Out-of-Pocket Drug Spending: Beneficiaries in the Part D prescription drug coverage gap, or “donut hole,” will benefit from greater savings on prescription drugs. As a result of the Affordable Care Act, in 2015, enrollees who reach the donut hole will receive coverage and discounts of 55 percent on covered brand name drugs and 35 percent on covered generic drugs, an increase from 52.5 percent and 28 percent, respectively, in 2014. The Affordable Care Act’s Coverage Gap Discount Program has provided discounts to more than 7.9 million Medicare beneficiaries, saving $9.9 billion on prescription drugs, or an average of $1,265 per beneficiary.

Greater Protection for Beneficiaries: CMS intends to again use its authority, provided by the health care law, to protect Medicare Advantage enrollees from significant increases in costs or cuts in benefits, and, for the 2015 contract year, finalizing the permissible amount of increase in total beneficiary cost to $32 per member per month (down from $34 per member per month for the 2014 contract year). CMS also continues to require plans to refine their offerings so that beneficiaries can easily identify the differences between their options.

Increased Protections for Beneficiaries Affected by Changes in Medicare Advantage Plan Networks: The final Call Letter strengthens tools used to ensure compliance with established provider access requirements and establishes best practices for Medicare Advantage Organizations to follow when they make significant changes to their provider networks.

Payments to Medicare Advantage Plans:

CMS estimates that the overall net change to plan payments between 2014 and 2015 to be +0.4 percent, compared to the estimated overall net change to plan payments of -1.9 percent for the proposals in the Advance Notice Individual plan payments will vary by plan based on, but not limited to, its location and star rating.

Before the Affordable Care Act, Medicare Advantage plans were paid more than 10 percent compared to traditional Medicare, costing the program more than $1,000 per person each year, while quality and health outcomes were similar to those enrolled in traditional Medicare. The changes underway reduce excessive payments to Medicare Advantage plans, while incentivizing quality improvements by basing part of Medicare Advantage payment on plan quality performance.

To provide for continued stability in the Medicare Advantage program, CMS will implement a new phase-in schedule for the Part C risk adjustment model introduced in 2014. In addition, to improve payment accuracy, CMS has refined its risk adjustment methodology to account for the impact of the influx of baby boomers. In addition, for 2015, CMS will not finalize the proposal to exclude diagnoses from enrollee risk assessments.

Other policies that are not being finalized as proposed include:

Delayed implementation of new Part D Risk Adjustment Model.

Not implementing some proposed changes to the Star Ratings.

Not implementing the proposal to require additional coverage in the gap for generic and brand drugs in Enhanced Alternative plans.

Barry Blitt said this about the above cover for The New Yorker: “This whole enterprise was just an elaborate excuse. I enjoyed drawing Ted Cruz, John Boehner, and Michele Bachmann as petulant children—and I especially wanted to draw an open-mouthed Mitch McConnell being spoon-fed his meds.”

Obama is certainly delivering the “medicine” as news comes in showing that enrollment in the Affordable Care Act exceeded projections of seven million, and the number of uninsured is falling to new lows. While good for the United States, this is certainly bitter medicine for Republicans. There is additional bitter medicine for Mitch McConnell as the number signing up in Kentucky exceeded 360,000 with 75 percent previously uninsured.

The “doc fix” has become a strange legislative tradition as Congress regularly votes to stop the automatic cuts in physician payment called for under the flawed Sustainable Growth Rate formula. As I discussed in March, this time there were a couple of new twists which were known, but in addition it turns out that another item hidden in the bill reveals a lot about the Republican Party.

First I’ll recap what we had already known. The “doc fix” proposed to block the cuts which would have taken effect in April was for one year and included multiple other measures, including a delay in implementing change to ICD-10 diagnosis codes until at least October 2015. Physician groups actually opposed this bill because a permanent fix was also under consideration and it was feared that passing yet another temporary fix would lead to abandonment of the permanent fix (which does now appear dead).

The “doc fix” regularly passes with bipartisan support because Congress is not going to risk the backlash which would be created if many Medicare patients could no longer find physicians willing to accept them. This time the House passed the “doc fix” on a voice vote, which allows individual members to avoid being held accountable for the vote.

Over the weekend we learned why House Republicans wanted to pass this on a voice vote. Another item in the bill made some changes in the Affordable Care Act which was desired by small business and which Democrats were willing to make:

At the prodding of business organizations, House Republicans quietly secured a recent change in President Barack Obama’s health law to expand coverage choices, a striking, one-of-a-kind departure from dozens of high-decibel attempts to repeal or dismember it.

Democrats describe the change involving small-business coverage options as a straightforward improvement of the type they are eager to make, and Obama signed it into law. Republicans are loath to agree, given the strong sentiment among the rank and file that the only fix the law deserves is a burial.

“Maybe you say it helps (Obamacare), but it really helps the small businessman,” said Rep. Phil Roe, R-Tenn., one of several physician-lawmakers among Republicans and an advocate of repeal.

No member of the House GOP leadership has publicly hailed the fix, which was tucked, at Republicans’ request, into legislation preventing a cut in payments to doctors who treat Medicare patients.

It is unclear how many members of the House rank and file knew of it because the legislation was passed by a highly unusual voice vote without debate.

This shows how dysfunctional Congress has become. Normally both parties would see it as a victory for the system that they passed a measure to make requested changes in the Affordable Care Act. However, Republicans felt compelled to hide this vote because it contradicts their public policy of only supporting repeal (having voted for repeal over fifty times). Since this became public, the Republicans have faced criticism from the right, probably making it even harder for them to vote on improvements in the Affordable Care Act in the future.

The fix which passed allows small businesses to offer policies with higher deductibles. This allows for lower premiums, and the higher deductibles are often handled separately with Medical Savings Accounts. There are also added protections in new insurance policies under the Affordable Care Act such as annual limits on out of pocket expenses and the elimination of annual and lifetime caps on coverage which help offset the problems created by higher deductibles.

If Republicans should attack the Affordable Care Act based upon including high deductible plans, keep in mind that this is exactly the type of plan which Republicans frequently advocate, and that the Republicans voted to increase the allowable deductible levels in response to requests from small business. Democrats had no objection to the change as the limit on deductions was originally placed in the bill because it was supported by Republican Senator Olympia Snowe. In response to this addition, Snowe voted for the Affordable Care Act when in the Senate Finance Committee but ultimately voted against the bill on the Senate floor, along with every other Republican Senator.

New figures from Gallup show a further decrease in the number saying they are uninsured. The number of uninsured decreased to 15.6 percent in the first quarter of this year, a 1.5 percent decrease from the fourth quarter of 2013. This is the lowest recorded level since late 2008 and suggests that the Affordable Care Act is successful in providing insurance to the previously uninsured. This also shows a further decrease from a similar survey conducted last month.

The uninsured rate has been falling since the fourth quarter of 2013, after hitting an all-time high of 18.0% in the third quarter — a sign that the Affordable Care Act, commonly referred to as “Obamacare,” appears to be accomplishing its goal of increasing the percentage of Americans with health insurance coverage. Even within this year’s first quarter, the uninsured rate fell consistently, from 16.2% in January to 15.6% in February to 15.0% in March. And within March, the rate dropped more than a point, from 15.8% in the first half of the month to 14.7% in the second half — indicating that enrollment through the healthcare exchanges increased as the March 31 deadline approached.